IDEAS home Printed from https://ideas.repec.org/a/bpj/evoice/v19y2022i2p183-205n3.html
   My bibliography  Save this article

The Influence of Economic Freedom on the Shadow Economy in Developed and Developing Countries

Author

Listed:
  • Freytag Andreas

    (Department of Economics, Friedrich-Schiller University Jena, Carl-Zeiss-Str. 3, D-07743, Jena, Germany)

  • Schneider Friedrich

    (Research Institute of Banking and Finance, University of Linz, Altenberger Str. 69, A-4040, Linz, Austria)

  • Spiegel Sebastian E.

    (Friedrich-Schiller University Jena, Jena, Germany)

Abstract

We empirically analyze to what extent economic freedom can explain the size and development of the shadow economy in OECD and other European countries. We econometrically examine the relation between a change of the overall index of economic freedom and the change of the shadow economy. We undertake an econometric panel estimation of 141 countries over the period 2000–2007. Our results demonstrate that first, the higher the economic freedom, the lower is the shadow economy. This holds especially for the index-sub-component legal structure and security of property rights. The sub-component freedom to trade internationally provides further support for this relation, limited to cases of positive changes of economic freedom. Second, the effects are asymmetrically, they are stronger when economic freedom increases than in the case of a decrease.

Suggested Citation

  • Freytag Andreas & Schneider Friedrich & Spiegel Sebastian E., 2022. "The Influence of Economic Freedom on the Shadow Economy in Developed and Developing Countries," The Economists' Voice, De Gruyter, vol. 19(2), pages 183-205, December.
    • Handle: RePEc:bpj:evoice:v:19:y:2022:i:2:p:183-205:n:3
    DOI: 10.1515/ev-2022-0008
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ev-2022-0008
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/ev-2022-0008?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    shadow economy; economic freedom; economic policy;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:evoice:v:19:y:2022:i:2:p:183-205:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.